Carrying over and buying leave in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
Employees in the UK are entitled to 5.6 weeks of statutory annual leave per year — 28 days for a five-day-week worker, including bank holidays. Most of that leave must be taken in the leave year it accrues, but specific rules govern when it can be carried over, and some employers also offer a buy-and-sell scheme on top.
The basic carry-over rules
The statutory 5.6 weeks is made up of two pots under EU-derived law (retained in UK law post-Brexit):
- 4 weeks — derived from the Working Time Directive
- 1.6 weeks — the UK's additional entitlement
The carry-over rules differ between these two pots.
The 1.6-week pot can be carried over into the next leave year if the employer and worker agree in writing — or if the contract or policy already permits it. Many employers allow this as a matter of course.
The 4-week pot is more restricted. It can only be carried over in defined circumstances:
- The worker was too sick to take it (statutory sick leave).
- The worker was on maternity, paternity, adoption, shared parental or other family leave.
- The employer failed to give the worker a reasonable opportunity to take the leave, or discouraged them from taking it, or did not inform them that untaken leave would be lost.
That last point matters. Since a 2023 Court of Appeal ruling (confirmed in subsequent HMRC and government guidance), employers have a positive obligation to actively encourage workers to take their leave and warn them before it lapses. If they do not, the worker's right to carry over survives.
How long can carried-over leave be used?
Leave carried over because of sickness must be taken within 18 months of the end of the leave year in which it accrued. Leave carried over for family leave reasons, or because the employer failed in its obligations, does not have a fixed statutory deadline beyond what the employer sets — though most employers impose a reasonable use-by date, typically within the first quarter of the following leave year.
Employers should spell this out clearly in their leave policy. Vague policies create disputes.
What the Employment Rights Act 2025 changes
The Employment Rights Act 2025 strengthens several day-one employment rights and increases the scrutiny on employer conduct. While it does not overhaul the carry-over framework directly, it raises the overall standard expected of employers around transparency and fairness. Workers who feel their leave rights have been undermined have a stronger backdrop against which to bring tribunal claims. It is a good prompt to audit your leave policy and make sure carry-over rules, deadlines and communication processes are documented.
Buying and selling annual leave
Statutory leave cannot be bought out (paid in lieu) except on termination of employment. That is a firm rule — you cannot pay a worker to waive their statutory 5.6 weeks while they remain employed.
However, many employers offer a flexible benefits scheme that lets workers buy or sell leave above the statutory minimum. For example, if your contractual entitlement is 28 days plus bank holidays (so, say, 36 days total), a worker might be permitted to buy an additional five days or sell up to five days back to the employer.
The mechanics vary:
- The salary cost of the bought or sold days is typically spread across the year via a payroll deduction or addition.
- HMRC treats bought leave as a reduction in taxable pay and sold leave as an increase — so income tax and National Insurance apply in the normal way.
- Any scheme must be voluntary. Workers cannot be required to sell leave that brings their remaining entitlement below the statutory 5.6 weeks.
If you run a buy-and-sell scheme, be clear in your policy about: how many days can be traded, the deadline for elections (usually before the leave year starts), how pay is adjusted, and what happens if a worker leaves part-way through the year having already taken bought leave.
What employers should have in writing
A well-drafted leave policy should cover:
- The leave year dates
- How much leave can be carried over and from which pot
- The deadline by which carried-over leave must be taken
- The process for requesting carry-over (especially for sickness-related carryover, where medical evidence may be relevant)
- Whether a buy-and-sell scheme exists, and if so, the rules, limits and payroll treatment
- What happens to untaken or bought leave when employment ends
For businesses managing staff across multiple locations or countries, keeping leave rules consistent while compliant with local law adds another layer of complexity — something a platform built to run payroll across multiple countries can help structure correctly.
Clear documentation protects both sides. If a worker raises a tribunal claim over lost leave, the employer's first line of defence is evidence that they communicated leave entitlements properly and gave a genuine opportunity to take them.
---
Run HR and payroll in United Kingdom with Mellow
Mellow brings HR, payroll and 12 AI agents into one platform — built to handle United Kingdom properly, with payroll included, from £4 per employee per month. The AI agents don't just answer questions; they generate contracts, run cost estimates and draft letters for you.
- United Kingdom payroll software
[Start a free trial →](/register)